"Consumers will be able to shop for what they want, read what they want and watch they want anywhere at any time," said Tim Leslie, vice-president of Amazon Instant Video for the UK and Germany.

LoveFilm, which offers streaming of television series such as The Walking Dead and hit films such as The Place Beyond the Pines and Wall-E, will be merged with the Amazon Prime subscription service, which gives members perks including unlimited free delivery and borrowing up to 500,000 Kindle ebooks.

Existing subscribers will get access to the new LoveFilm service, to be called Prime Instant Video, which will have the effect of enabling Amazon to leapfrog Netflix as the UK's biggest digital TV and film streaming business.

Amazon aims to offer a broader service than Netflix, which supplies mostly older programming, by including the option of digitally renting or purchasing 50,000 new releases such as Captain Phillips and Game of Thrones.

"Even if you have another service you are going to want our service," said Leslie. "It is the only place you are going to be able to find certain great TV shows, movies and original content all in one place. It is the most complete digital video service in the UK."

Amazon is hoping to challenge Netflix by bundling Amazon Prime with LoveFilm at a knockdown price. Netflix charges its estimated 2 million UK customers £5.99 a month, about £72 a year, the same price as the existing LoveFilm service.

Amazon Prime costs £49 annually. The new combined package will be charged at £79, about £6.58 a month, making it 35% cheaper than subscribing to each service separately.

"All of these things in one package for less than £7 a month, we think this is best value out there," said Leslie.

Users who only want access to Prime Instant Video can continue to pay £5.99. The LoveFilm brand will continue to be used for the DVD by post rental business Amazon is continuing to run.

Amazon bought into the decade-old LoveFilm in 2008, taking full control in 2011, to drive its move into TV and film rentals and digital streaming in the UK.

"Our customers already know they are part of Amazon, it is the best thing to happen to LoveFilm since the launch in the first quarter of 2004," said Simon Morris, LoveFilm's chief marketing officer.